INDIA’S FIRST STATE–OF–THE-ART CRAFT BREWERY AT NASHIK, MAHARASHTRA BRIEF PROFILE

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2 EXECUTIVE SUMMARY Executive Summary

OVERVIEW • The market for fine quality, hand crafted in India is around USD 25 million with a significant potential demand in the sector • Ace Alcobev Private Limited (“Ace”) is establishing a 50,000 hectolitre (5,000,000 litres), state-of-the-art Craft brewery in Nashik, Maharashtra that operates to highest international standards to cater to the fastest growing market in the world o Located 250 kms from cities of Mumbai and Pune, together comprising 8% of India’s beer consumption o Ace has secured all requisite licenses and acquired 25 acres of land for this project • Nashik is renowned for its wine and a popular destination for wine tourism. Ace has designed its brewery to attract incoming tourists for Brewery Tours, a first-of-its-kind in India, to promote its brand/s and beer consumption. • A proven management team of seasoned alcoholic beverages industry professionals has identified and initiated execution of multiple strategic initiatives to successfully position the company in the Indian market • A diverse distribution channel to be handled by one of the largest Alcobev distributors which has a network spreading across 25 key potential cities of India OPPORTUNITY

• Opportunity to enter India’s fast growing craft beer market by partnering Ace: o 20,000 hectoliters capacity in year 1, increasing by 20% YOY to reach full capacity within 5-7 years o Ace has entered into a Technical Expertise & Product Development understanding with one of the oldest family owned and leading brewing groups based in Germany o Ace has entered into a Distribution understanding with one of the largest Alcobev brand distributors having a network spreading over 25 key potential cities / metros of India • Opportunity to acquire stake/ invest in India’s first-of-its kind craft beer/ brewery project o Total Project Cost : ~USD 4.50 million

4 CRAFT BEER IN INDIA India: Craft Beer

The craft beer sector in India is most promising OVERVIEW

• Craft beer is an American trend which has been booming globally and is now set to catch up in India in a big way • Currently there are around 3,000 craft breweries in the US, totaled an estimated USD $ 17 billion by value of craft beer sales in FY 2013 & representing 15 % of the US beer market by Volume ( The US beer market is currently valued at USD $ 100 billion ) • Micro brewing is primarily a boutique business where beer is brewed inside a premises in regulated quantities and served fresh , using quality ingredients • The Microbrewery boom started in 2008 here in India, currently 30 odd Brewpubs / microbreweries are operating across 5-6 cities and the market for fine quality hand crafted beers is around USD 25 million (Another 10 are in the process of being set up) • Craft breweries are generally small , independent and traditional with a focus on integrity, diversity , authenticity, innovation, quality of ingredients, flavours and brewing technique • There is significant potential demand in this sector since the market is dominated by one style (Lager) of beer and consumers are only now being exposed to new styles of quality and flavorful craft beers

BREWING PROCESS

Source: Economic Times, Prost 6 India: Craft Beer

MARKET TRENDS • Brewpubs are attracting Indians away from industrial bottled beers. High end hotels and restaurants are keen to bring “ The Beer on Tap “ concept back to serve their customers different styles of international quality delicious craft brews • The preferred shelf life of beer among traders is 6-12 months • Most beer sold in India is within the price range of USD 1.3 - 2.2. Beers considered “premium” will sell for USD 2.8 - 8.5 • Bottled beer is most popular (60% of consumption) but cans and draught beer (in kegs) are growing; 330ml bottles are common • Craft brewers from USA, Australia and Europe are showing keen interest to enter the now growing Indian craft beer market

GROWTH FACTORS • Quality: Craft beers taste much better than the mass market produced beers, as they are brewed in small batches with the finest quality of ingredients and equipment used to produce it. • Health Benefits: Research has shown that craft beer offers more health benefits and nutrition than red wine • More Variety: Thousands of flavourful craft beers can be brewed by using different ingredients thus providing more options to choose from • Pairing with Fine Cuisine: The brewers can produce a range of craft beers to suit nearly every kind of food, including desserts • Beers for every Season: Certain craft beers are better suited for different seasons depending on its taste and texture

Source: Economic Times 7 Benefits of Craft Beer

Source: www.craftbeer.com 8 COMPANY OVERVIEW Company Snapshot

Year of Incorporation: 2011 • Ace Alcobev Private Limited (“Ace”) plans to establish a state-of-the-art craft brewery in Nashik, Maharashtra that operates to highest international standards to cater to the Headquarters: rapidly growing beer market in the world • Mumbai, Maharashtra o License: Received license and all clearances to manufacture up to 250,000 Brewery: hectolitres • Nashik, Maharashtra o Land: Acquired 25 acres in Nashik MIDC*, located 250 kms from Mumbai o Types of Beers: Water: Provided by MIDC and tested for beer production o Installed Capacity: Proposed to brew 50,000 hectolitres(5,000,000 litres) in the • German Lager first year • Belgian Blond Ale o Technical Expertise & Product Development: Entered into an understanding • Imperial Double India Pale with one of the oldest family owned and leading brewing groups based in Germany • Weissbier FINANCIAL HIGHLIGHTS • Dunkel • The project cost is estimated to be USD 4.50 million, with the promoters contributing • Radler USD 1.50 million, while the remaining USD 3 million being raised from Investors & Institutions Geographic Location Year 1 2 3 4 5 6 7 8

Turnover 3.05 4.00 5.04 6.17 7.40 8.75 9.69. 10.71 Delhi (USD mn) • EBITDA 0.56 0.95 1.40 1.84 2.41 3.03 3.51 4.04 (USD mn) NASHIK EBITDA % Mumbai • 18.50% 23.73% 27.82% 32.55% 32.55% 34.70% 34.70% 37.69% Pune• • Hyderabad Utilization • • Chennai 40% 50% 60% 70% 80% 90% 95% 100%

MIDC: Maharashtra Industrial Development Corporation USD 1 = INR 60 10 Marketing & Operations

PRODUCT PORTFOLIO • Ace proposes to brew the following styles of beer: Type Flavour Alcohol by Volume German Lager Mild ,crisp, blond , clear , easy drinking, low hoped 5% Belgian Blond Ale Full flavored, rocky head, mouth feel -silky & sweet 6-8% Imperial Double India Pale Stronger, paler, bitter, hop aromas 8% Weissbier Made from malted wheat , smooth, strongly hoped, fruity aromas & creamy texture 5% Dunkel Dark color with a clean taste of lager, smooth , malty flavor , very little hop bitterness 5% Radler A beer based mix drink with carbonated lemonade 2-3%

PACKAGING • Use of innovative packaging techniques to promote the brand and increase visibility:

Exclusive Packaging One Way Keg 5L Party Keg

11 Marketing & Operations

PRODUCTION DISTRIBUTION • The 1st year of brewery commissioning would have 40% • Strategic plan is to target 150 key high potential on- of the installed capacity, i.e. 20,000 hectoliters premise outlets & off-premise retail outlets in the 1st • Three stock keeping units to be maintained: year in Mumbai, Pune, Nashik, Nagpur, Aurangabad, Daman & ., along with installing taps & draught o 500ml and 330ml bottles mainly for the retail dispensing equipment at good potential outlets market (off-premise) • Distribution to off-premise retail outlets will be handled o 30 litre kegs for on premise consumption by one of the largest Alcobev brand distributors having o 5 litre party kegs for retail market (off-premise) a network spreading over 25 key potential cities of India • Around 50% of the production to be sold in kegs

SALES CHANNELS

Opportunity Strategy

On-Premise Taps • Front-end presence helps increase brand • Set up 2 tap rooms/pubs, spread across 700- equity and off-premise sale 1500 sq. ft., to serve fresh beer on tap • Growth in brew pubs signals a shift in • Design a menu which pairs food with the beer drinking habits of urban Indians beers on offer

Off-Premise Retail • Indian beer market has grown strongly at • Distribution partner to aggressively market CAGR of 14% over the last 5 years and stock the beer bottles and party kegs in leading retail outlets of major cities

Exports • Position the product as India’s first craft • Develop exports to Indian restaurants beer available internationally to target globally Indian expats communities abroad

12 Ace’s USP

• Company is uniquely positioned to capture existing market & cater to new demand • First mover advantage will offer potential for significant market share • Pan India presence to add to brand equity and volumes • Tap rooms/ tap installations, to be set up at key locations, will offer a brand experience along with fresh beer • Tourism & Events at the brewery will ensure brand activation

Micro-Brewery Industrial Brewery Craft Brewery (Ace) License Capacity 2500 HL >200,000 HL 250,000 HL (Per Annum) Only within the premises Regulations for Sale of Retail Retail No retail beer Trade On premise Kegs (Allowed in some states) Types of Beer Various Lager Various 330 ml 330 ml 500 ml Packaging (SKUs) None 650 ml 5 liter party keg 30L/50L keg Quality High Mass produced High Flavor Good Watery Full Flavor Alcohol Strength Upto 8% Upto 8% Upto 8%

13 The Brewery

Brewery Site Brewery (proposed)

Brew House (proposed) Amphitheatre (proposed)

14 Plant and Machinery

PROPOSED EQUIPMENT • Ace plans to establish a state-of-the-art craft brewery applying best operating practices currently available, designed for premium results

15 Location Advantage

WHY MAHARASHTRA WHY NASHIK • Maharashtra’s beer market is 15% of India, growing at • 250 kms away from Mumbai & well connected via 12-15% highways • City of Mumbai alone sells 6% of total national beer • Plot located in MIDC Industrial Zone where basic market infrastructure like road, water, electricity is readily • Major cities like Mumbai, Daman, Pune and available Aurangabad are at a distance of about 200 kms; while • Close to other key states like Goa, Andhra Pradesh, Hyderabad, Bangalore and Panaji are less than 700 , and Daman . kms away • Nashik’s natural beauty coupled with wine grown in • State has open policy in distribution and pricing of beer region has earned it a reputation as India’s wine capital and is therefore, an attractive entry point for and destination for wine tourism International Companies • Ace’ brewery has been designed to arrange for Brewery Tours, a first-of-its-kind in India. Considering the ban Single largest on alcohol advertising, Ace is keen to attract captive contributor of wine tourists (among others) to its scenic plant location beer volumes in for brewery tours & beer festivals western region

Largest Per capita consumption consumer of of beer is among the beer in India highest in the county

*Population for the year 2011, in mn *Volume for the year 2010, in mn cases 16 Team Profile

THE TEAM LEONARD MENEZES, CEO A Management Post Graduate from Mumbai University and a senior alcoholic beverages industry professional with over twenty years of working experience at United Breweries Limited (UB). At UB, Leonard worked in Marketing, Business Development, Production and Distribution across India, Middle East, Africa and other international markets. Prior to Ace, he was CEO at Privilege Breweries Private Limited (contract manufacturing for AB Inbev) and played an instrumental role in setting up the business.

ABHIJIT RAO, MANAGING DIRECTOR Abhijit graduated from American Intercontinental University, London with a Business Management degree (International Business). He has lived in Nashik for almost ten years and has been responsible for running plant operations and leading administration activities at VTC Limited, a business owned by his family. His public relations and network in government departments have been a tremendous asset in setting up this brewery project.

ABHINAY RAO, DIRECTOR, BOARD MEMBER Abhinay holds a B.S in Industrial Management from Purdue University, an MBA from USC’s Marshall School of Business and MSc in Finance from London Business School. Abhinay’s expertise lies in Corporate Finance and he was with Sovereign Capital Partners in London before returning to India in 2011 to lead the Mumbai operations of India Advisory Partners (India) LLP. Prior to that, he was CIBC World Markets Investment Banking team in New York and has also worked with Zurich Financial Services in Los Angeles.

17 APPENDIX: INDIAN BEER MARKET India: Beer Opportunity

India is at the start of the growth curve

CONSUMPTION • The Indian beer market has grown strongly over past 5 years • Income growth will drive per capita beer consumption from a low base Beer Consumption vs Income Level

CAGR 14%

DEMOGRAPHIC DIVIDEND • India will have the world’s largest population by 2025 • By 2030, 20% of world’s below 25-year olds will be Indian • Population increase coupled with young demographics will o fuel rapid growth of beer market Net increase of 270 million in working population o A significant middle-class is set to emerge supporting increased spending power

Source: Canadean (2011), World Bank(2011), United Nations(2011) 19 India: Beer Opportunity

TRENDS CHALLENGES

• India’s beer consumption is far below other emerging Market is highly regulated markets of similar income levels • Ban on advertising alcohol, although surrogate methods could be used for marketing • Excessive state regulation and intervention

Affordability & Availability • Taxation is significantly higher than other countries and also much higher for Beer than hard liquor • Duty not set according to alcohol content • 72,000 licensed outlets across the country

• Low consumption only means that the market offers a great CHINA INDIA potential for growth for beer in India Average Price : 90% of beer sold at below 650ml beer costs >Rs.100 RMB 4 (under Rs.28) Number of Shops : One for every 295 people One for every 17,350 people

Source: UBS, Company Estimates 20 Market Overview COMPETITIVE ANALYSIS • UB has held disproportionate share, but market is now opening up to new players. Carlsberg has reached 6% share in <6 years and has 6 breweries through mix of acquisitions and greenfield projects, and is adding one in Bihar now.

AB Inbev Others Carlsberg 1% 10% 4% Mt. Shivalik 4% UBL Indian Beer Market 54% SAB Miller 270 million cases 4% 23%

BREWERIES – BY REGION & STATE

MOHAN MEAKIN

West Bengal

• •

Orissa • •

12% East

N.E. States •

Goa/ Daman • 31% West Maharashtra • • • Punjab • •

Haryana • • • Rajasthan • • •

22% United Breweries North Uttar Pradesh • • • (Owned & Contracted) Himachal Pradesh • • SAB Miller Breweries Karnataka • •

Mohan Meakin Ltd. Andhra Pradesh • • • Carlsberg India

35% Tamil Nadu

South • • • •

Source: Market share data for FY11. 21 Market Overview INTERNATIONAL PLAYERS IN INDIAN BEER MARKET • With entry of international players into India, large number of brands are now being brewed locally

No. of Entered Company Brand Presence Comments Breweries India in

AB Inbev • Bud Magnum positioned as highest- Southern & priced strong beer in India Initially, a 50:50 joint venture 2 2007 with Crown Beers Ltd. Now a Western India • 49:51 JV with RJ Corp for marketing, 100% owned subsidiary distribution & sales of the beer • 3rd largest beer brewer in India within 6 2006 Pan-India years of operation Carlsberg India Pvt Ltd 6 • Sold a million cases in the first 6 months 2009 Pan-India of its launch

Heineken Group Maharashtra, • The fastest growing line in UB’s portfolio Holds 37.5% equity shares in 1 2011 Delhi, Bangalore, • Has 65% share in Super Premium Beer United Breweries Ltd Kolkata, Goa segment

• 2nd largest market share in India SAB Miller India 10 1996 Pan-India • Growth of 5% in volumes in FY 12

Molson Coors Cobra Exported to 50 • Plans to acquire breweries in India to JV between Molson Coors and 1 2009 Cobra Indian Beer countries expand presence Bihar, Haryana, • Entered into JV with Arian Breweries Mahou San Miguel Rajasthan, 1 2012 • Plans to attain 2% market share in the A 50:50 joint venture with Uttarakhand, Uttar Arian Breweries initial phase Pradesh

Source: Company Websites, Economic Times 22 Maharashtra: Brewery Landscape

Installed MAHARASHTRA BREWERIES Brewery Year Group Capacity Name Established (HLPA) (A) Aurangabad Aurangabad UB 1993 0.50 Breweries Maharashtra Daman Carlsberg India Carlsberg 2008 0.70 (B) Ltd NASHIK Foster Aurangabad SAB Miller 1998 0.40 (A) Breweries (E) Inertia Industries UB 1989 0.70 Mumbai (C) Lilasons Lila’s 1994 0.40 Pune Breweries Pals Distilleries SAB Miller 1981 1.10 (D) State’s consumption is projected to more than (B) Daman* Blossom triple in next 10 years Khemani/ UB 1989 0.90 Breweries (C) Khopoli Mohan Mohan Rocky 1988 0.10 Meakin • Most breweries in Maharashtra are concentrated in 3-4 cities (D) Lonand Privilege and on average, are over twenty years old AB Inbev 2010 0.30 Industries • Aurangabad is home to six of the ten breweries in the state. (E) Thane Water shortage in Aurangabad is a cause of concern and Bombay UB 1994 1.20 impacts brewery cluster in the city Breweries Hindustan Agarwal Closed 0.60 • City of Nashik, where Ace Alcobev’s craft brewery is located Breweries has multiple water sources including being near source of TOTAL INSTALLED CAPACITY HLPA (excl Daman) 6.0 India’s second longest river, Godavari

*Daman is a Union Territory and not part of the State of Maharashtra 23 Contacts

Leonard Menezes Abhinay Rao

Mumbai Mumbai Ace AlcoBev Pvt. Ltd India Advisory Partners (India) LLP 314 Midas, Sahar Plaza 803, Meadows, Andheri Kurla Road Sahar Plaza, JB Nagar, Mumbai - 400 059 , INDIA Andheri Kurla Road, Andheri East Mumbai 400 059 India [email protected] [email protected] +91 9920 717426 +91 22 6565 9901

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